Uddrag fra John Authers, Financial Times:
Any number of measures show that this is the most extreme sentiment we have seen in the stock market since the top of the dotcom bubble in 2000. That is becoming the measure of comparison. It is a totally safe bet that there will be a big correction at some point. But any idiot can see that; the point is to work out when that will happen (if you are a trader), or to find something better to invest in now for the long term (if you are an investor). Neither is easy.
So, let’s try to keep things brief for a change. There was an interesting reverse for some of the most exciting and fashionable stocks on Wednesday, notably Apple Inc. and Tesla Inc., but this did nothing to shift the market. More defensive stocks had a better day than usual, but again, nothing that screams a change of direction. One telling comparison with 2000 can be seen in this chart, which compares the Russell 3000 value and growth indexes over the last 25 years. I normalized the chart to equal 100 on the day in 2000 when value made its previous low against growth. We know that the bursting of the bubble followed that time:
To save you from squinting at the chart too much, the last “melt-up” phase in 2000 was even greater than the one of the last few months, but the gain since growth stocks briefly lost ground to value in the weeks after the 2016 election is even bigger than in the four years leading up to the top of the internet bubble. Growth has done twice as well as value in that period.
In 2000, rates were low, and the Fed was beginning to raise them. This time around, rates are negligible and there is no chance of their rising for years. In 2000, the economy had been expanding for years; this time it is still clambering out from the hole created by arguably the greatest sudden stop in history. So there are points of difference.
The similarity counts for more, though. At some point, this will reverse. But, as in 2000, there may well be no clear catalyst for that reversal in advance. And people who stick in value throughout may not feel greatly vindicated in the end. Back then, those who stuck to their guns saw clients pull their money, and wished they had gone with the herd. The same will probably happen this time.
